Gold & Silver Daily

Ed's Critical Reads

Oct 31, 2014

Q.E. central bankers deserve a medal for saving society

The final word on quantitative easing will have to wait for historians. As the US Federal Reserve winds down QE3 we can at least conclude that the experiment was a huge success for those countries that acted quickly and with decisive force.

Yet that is not the ultimate test. The sophisticated critique - to be distinguished from hyperinflation warnings and "hard money" bluster - is that QE contaminated the rest of the world in complicated ways and may have stored up a greater crisis for the future.

What we can conclude is that extreme QE enabled the US to weather the most drastic fiscal tightening since demobilisation after the Korean War, without falling back into recession. Much the same was true for Britain.

The Fed's $3.7 trillion of bond purchases did not drive up debt ratios, as often claimed. It reduced them.

Ambrose is a paid whore/mouthpiece for the 'establishment'---and will print whatever he's told to print.  This should be kept in mind should you read this commentary posted on The Telegraph's Internet site at 9:00 p.m. GMT on Thursday evening.  I thank Roy Stephens for his first offering in today's column.

View full GSD edition

The $75 trillion shadow hanging over the world

Global shadow banking assets rose to a record $75 trillion (£46.5 trillion) last year, new analysis shows.

The value of risky investment products, mortgage-backed securities and other non-bank entities increased by $5 trillion to $75 trillion in 2013, according to the Financial Stability Board (FSB).

Shadow banking, which is not constrained by bank regulation, now represents about 25pc of total financial assets - or roughly half of the global banking system. It is also equivalent to 120pc of global gross domestic product (GDP).

The FSB, which monitors and makes recommendations on financial stability issues, said that while non-bank lending complemented traditional channels by expanding access to credit, data inconsistencies together with the size of the system meant closer monitoring was warranted.

This commentary is also from The Telegraph.  It was posted there at 4:01 p.m. GMT on their Friday afternoon---and I thank South African reader B.V. for sharing it with us.

View full GSD edition

Prosecutors Suspect Repeat Offenses on Wall Street

It would be the Wall Street equivalent of a parole violation: Just two years after avoiding prosecution for a variety of crimes, some of the world’s biggest banks are suspected of having broken their promises to behave.

A mixture of new issues and lingering problems could violate earlier settlements that imposed new practices and fines on the banks but stopped short of criminal charges, according to lawyers briefed on the cases. Prosecutors are exploring whether to strengthen the earlier deals, the lawyers said, or scrap them altogether and force the banks to plead guilty to a crime.

That effort, unfolding separately from a number of well-known investigations into Wall Street, has ensnared several giant banks and consulting firms that until now were thought to be in the clear.

As I and others have been saying for years, unless they start throwing people in jail---Wall Street and their bankster friends aren't going to change their behaviour.  This essay appeared on The New York Times website at 3:56 p.m. EDT on Thursday---and I thank Phil Barlett for sending it along.

View full GSD edition

Russian lawmaker asks Nobel Committee to strip Obama of Peace Prize

A representative of the populist LDPR nationalist party claims in an official letter that the US President should be blamed for thousands of innocent people’s deaths and therefore cannot keep his 2009 Nobel Peace Prize.

More and more international experts are calling Obama’s presidency dark times. The reason for that is the brutal policy that he is conducting all over the world, like Napoleon or Hitler had done before. But I want to warn Obama so that he pays more attention to history and understands that he can end up like Hitler,” MP Roman Khudyakov said in an interview with Izvestia daily.

The politician added that under Obama the United States participated in the “dirty war” in the Middle East, financed the armed conflict in Ukraine and violated international law by torturing suspected terrorists. All this makes the US President complicit in the violent deaths of several thousand innocent civilians and such a person cannot remain the holder of the Nobel Peace Prize, Khudyakov said.

I wholeheartedly agree, as he should never have been awarded the Peace Prize in the first place.  This news item was posted on the Russia Today website at 9:50 a.m. Moscow time on their Thursday morning, which was 1:50 a.m. EDT.  It's the second contribution of the day from Roy Stephens.

View full GSD edition

France denies warship delivery, as Russian bombers skirt E.U. airspace

France's controversial warship deal with Russia is hitting the headlines again, with a cacophony of statements and denials after a Russian minister published a French invitation to the hand-over ceremony.

Russian deputy prime minister Dmitry Rogozin on Wednesday (29 October) published a letter on his Twitter page by the French constructor of Mistral warships, supposedly inviting Russian authorities to the ceremony in St. Nazaire on 14 November.

He tweeted that the Russian state-owned arms company Rosoboronexport was invited for the delivery of one ship and for next steps on construction of the second one in the contract.

But a spokesperson of the constructor (DCNS) said a few hours later that the Mistral delivery has not yet been confirmed.

This news story, filed from Brussels, showed up on the Internet site at 9:56 a.m. Europe time yesterday morning---and it's also courtesy of Roy Stephens.

View full GSD edition

France on alert after mystery drones spotted over nuclear plants

France has launched an investigation into unidentified drones that have been spotted over nuclear plants operated by state-owned utility EDF, its interior minister said on Thursday.

Seven nuclear plants across the country were flown over by drones between Oct. 5 and Oct. 20, an EDF spokeswoman said, without any impact on the plants’ safety or functioning.

“There’s a judicial investigation under way, measures are being taken to know what these drones are and neutralise them,” Interior Minister Bernard Cazeneuve told France Info radio on Thursday, without specifying the measures.

The drone sightings may renew concerns about the safety of nuclear plants in France, the world’s most nuclear-reliant country with 58 reactors on 19 sites operated by EDF.

This news item appeared on the Internet site yesterday sometime---and it's the second offering of the day from reader B.V.

View full GSD edition

Has the E.U. lost the ability to enact sanctions?

The E.U. has had a rotten time trying to punch its weight on the international scene. Internal disagreements and treaty limitations mean it is little wonder that it is known as an economic giant but a political dwarf.

With the U.S. increasingly urging the E.U. to share the burden of keeping world order, the Union is finding out that the main mischief-maker is not some stubborn member state but one of its own institutions - the European Court of Justice.

The E.U.'s highest court has been busy unravelling the foreign agenda of the Union – by consistently overturning sanctions enacted by Brussels.

In its most recent ruling on 16 October, the court struck down anti-terrorism sanctions imposed on the Tamil Tigers in 2006, citing that the council’s decision to place the group on a list of terrorist organisations had been based on "imputations derived from the press and the Internet". 

This story, filed from Brussels, put in an appearance on their website at 9:28 a.m. Europe time on their Thursday morning.  The offerings from Roy just keep on coming.

View full GSD edition

Russia Agrees to Terms With Ukraine Over Gas Supply

Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent residents going without heat as temperatures drop.

The gas negotiations, brokered by the European Union, came as pro-Russian rebels stepped up attacks on Kiev government forces. European leaders said they hoped the deal would help improve ties between the two countries.

“This breakthrough will not only make sure that Ukraine will have sufficient heating in the dead of the winter,” European Energy Commissioner Guenther Oettinger said at a news conference in Brussels last night. “It is also a contribution to the de-escalation between Russia and Ukraine.”

This Bloomberg article, co-filed from Kiev and Brussels, appeared on their Internet site at 7:32 p.m. Denver time on Thursday evening.

View full GSD edition

Vladimir Putin is the Leader of the Moral World — Paul Craig Roberts

Vladimir Putin’s remarks at the 11th meeting of the Valdai International Discussion Club are worth more than a link in my latest column. These are the remarks of a humanitarian political leader, the like of which the world has not seen in my lifetime. Compare Putin to the corrupt war criminal in the White House or to his puppets in office in Germany, UK, France, Japan, Canada, Australia, and you will see the difference between a criminal clique and a leader striving for a humane and livable world in which the interests of all peoples are respected.

In a sane Western society, Putin’s statements would have been reproduced in full and discussions organized with remarks from experts such as Stephen F. Cohen. Choruses of approval would have been heard on television and read in the print media. But, of course, nothing like this is possible in a country whose rulers claim that it is the “exceptional” and “indispensable” country with an extra-legal right to hegemony over the world. As far as Washington and its prostitute media, named “presstitutes” by the trends specialist Gerald Celente, are concerned, no country counts except Washington. “You are with us or against us,” which means “you are our vassals or our enemies.” This means that Washington has declared Russia, China, India, Brazil and other parts of South America, Iran, and South Africa to be enemies.

This is a big chunk of the world for a bankrupt country, hated by its vassal populations and many of its own subjects, that has not won a war since it defeated tiny Japan in 1945 by using nuclear weapons, the only use of such terrible weapons in world history.

No one can read Putin’s remarks without concluding that Putin is the leader of the world.

I'd been saving Putin's incredible Sochi speech for my Saturday column, but current events have forced my hand---and here it is in now.  It's a long read, but an absolute must read, especially those who are serious students of the New Great Game.  It was posted on Paul's website on Sunday and, not surprisingly, it's courtesy of Roy Stephens.

View full GSD edition

Putin to Western Elites: Play-Time is Over

Most people in the English-speaking parts of the world missed Putin's speech at the Valdai conference in Sochi a few days ago, and, chances are, those of you who have heard of the speech didn't get a chance to read it, and missed its importance. Western media did their best to ignore it or to twist its meaning. Regardless of what you think or don't think of Putin (like the sun and the moon, he does not exist for you to cultivate an opinion) this is probably the most important political speech since Churchill's “Iron Curtain” speech of March 5, 1946.

In this speech, Putin abruptly changed the rules of the game. Previously, the game of international politics was played as follows: politicians made public pronouncements, for the sake of maintaining a pleasant fiction of national sovereignty, but they were strictly for show and had nothing to do with the substance of international politics; in the meantime, they engaged in secret back-room negotiations, in which the actual deals were hammered out.  Previously, Putin tried to play this game, expecting only that Russia be treated as an equal. But these hopes have been dashed, and at this conference he declared the game to be over, explicitly violating Western taboo by speaking directly to the people over the heads of elite clans and political leaders.

This commentary on Putin's speech was posted on the Zero Hedge website at 7:35 p.m. EDT yesterday evening---and I thank reader M.A. for sending it our way.  It's a must read as well.  Another commentary on this, written by Justin Raimondo, appeared on the Internet site on Thursday sometime---and it's definitely worth your while as well.  It's headlined "Putin’s Complaint"---and I thank International Man's senior editor Nick Giambruno for passing it around yesterday afternoon.

View full GSD edition

Iraqi Kurdish forces enter Syria to fight Islamic State

A first group of Iraqi Kurdish peshmerga fighters entered the besieged Syrian town of Kobani on Thursday to help push back Islamic State militants who have defied U.S. air strikes and threatened to massacre its Kurdish defenders.

Kobani, on the border with Turkey, has been encircled by the Sunni Muslim insurgents for more than 40 days. Weeks of U.S.-led air strikes have failed to break their stranglehold, and Kurds are hoping the arrival of the peshmerga will turn the tide.

The siege of Kobani -- known in Arabic as Ayn al-Arab -- has become a test of the U.S.-led coalition's ability to stop Islamic State's advance, and Washington has welcomed the peshmerga's deployment. It has intensified its air strikes in the past two days ahead of their arrival.

This Reuters article, filed from Suruç, Turkey, showed up on their website at 7;24 p.m. EDT yesterday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.

View full GSD edition

Japan Pension Fund Said to Unveil Asset Allocations Today

Japan’s public pension fund will announce new asset allocations today, a government official said, as the Nikkei newspaper reported that the fund will raise its targets for Japanese and foreign stocks to 25 percent each.

The 127.3 trillion yen ($1.2 trillion) Government Pension Investment Fund will also reduce its domestic debt allocation to 35 percent of assets and increase overseas bonds to 15 percent, the newspaper reported, without saying where it got the information. The figures are exclusive of short-term assets. Health Minister Yasuhisa Shiozaki will today approve the changes, which will be implemented over the medium to long term, according to the Nikkei. The government official who spoke on the timing asked not to be named due to not being authorized to comment publicly on the matter.

The contents of the Nikkei report were news to him, Shiozaki told reporters today. Investors have been awaiting GPIF’s revised strategy since a government panel that reviewed public pensions said last year the fund was too reliant on domestic bonds. The expected tilt to higher-yielding assets comes as the Bank of Japan stokes inflation and as pension payouts mount for the world’s oldest population.

This Bloomberg article, co-filed from Sydney and Tokyo, was posted on their Internet site at 9:56 p.m.  MDT last night, which was 8:56 a.m. Friday morning in Japan.  I thank Howard Wiener for finding it for us.

View full GSD edition

Koos Jansen: Chinese Gold Demand 1,541 Tonnes Y.T.D.

First things first, Chinese gold demand is still very strong and it’s in a uptrend since July.

Apologies for my late reporting on the latest SGE withdrawals numbers – which are the best benchmark for Chinese gold demand. I was trying to figure out some details on gold trade rules between the mainland and the Shanghai Free Trade Zone. I still haven’t got confirmation, so will get back to it.

Chinese wholesale gold demand is at least 1541 metric tonnes year to date (inc. week 42 – until  October 17). Shanghai Gold Exchange (SGE) withdrawals, as disclosed by the Chinese SGE reports, were 52 tonnes in week 42 and according to my estimates China has approximately net imported 991 tonnes year to date.

Perhaps the ones with a sharp eye noticed the title of this post claims Chinese gold demand is 1541 tonnes year to date, but in the chart above we read total SGE withdrawals stand at 1547 tonnes year to date. Do SGE withdrawals still equal Chinese wholesale gold demand? Not anymore, sadly.

This gold-related story is definitely worth reading---and it was posted on the Singapore website yesterday sometime.  I found it embedded in a GATA release.

View full GSD edition

Oct 30, 2014

Fed ends QE3 and sends upbeat signals on economy

The Federal Reserve voted on Wednesday to end its bond-buying stimulus program commonly known as QE3 and sent several upbeat signals to markets that it was not worried about global weakness, low inflation or a wobble in financial markets.

In the statement, the Fed left unchanged its pledge that rates would remain near zero for a “considerable time.” But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated.

The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.”

This article appeared on their website at 4:02 p.m. EDT yesterday---and today's first news item is courtesy of Casey Research's own Louis James.

View full GSD edition

Greenspan Sees Turmoil as Q.E. Boost to Markets Unwinds

Former Federal Reserve Chairman Alan Greenspan said he doesn’t think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

“I don’t think it’s possible,” Greenspan said during an event today at the Council on Foreign Relations in New York, responding to a question about the likely market impact of the Fed’s exit.

While the Fed’s bond-buying program has been a “terrific success” in boosting asset prices, it hasn’t galvanized effective demand in the real economy, Greenspan said.

This brief Bloomberg piece showed up on their Internet site at 8:35 a.m. Denver time yesterday morning---and I thank reader Ken Hurt for sharing it with us.

View full GSD edition

And the Biggest Beneficiary of QE3 was...

Aside from the S&P 500 of course, which made billionaires out of millionaires (even if it failed to make billionaires into trillionaires this time around -  we will have to wait for QE4 or QE5 for that), some may wonder: who was the biggest beneficiary of QE3? It certainly wasn't the U.S. middle class, which has seen its real wages decline in 6 of the past 7 months, and its disposable income is back at levels not seen since the mid-1990s.

No, the biggest winner of QE3 is the same entity that we noted benefited the most from Q.E. over the past 6 years, and which even the WSJ realized was the primary beneficiary of the trillions in cash created out of thin air by the Fed, when in late September Hilsenrath wrote "Fed Rate Policies Aid Foreign Banks"...  something we first said back in 2011 with "Exclusive: The Fed's $600 Billion Stealth Bailout Of Foreign Banks Continues At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went."

So yes, European banks: feel free to send your thank you cards to the Fed: without its $1.3 trillion cash injection who knows how many of you would have passed the ECB's "no deflation to model" most recent Stress Test.

A word of warning: let's all hope that now, with some $1.5 trillion in Fed cash on foreign (most insolvent European) bank balance sheet, or just about half of all Q.E. liquidity injections since the start of QE1, European banks are finally solvent. Or else, deflation, inflation, stagflation, hyperinflation, or what have you, the Fed will be storming right back in to bail out Europe's insolvent banks the U.S. middle class all over again.

This excellent article, along with two nifty charts, appeared on the Zero Hedge website at 3:18 p.m. EDT Wednesday afternoon.  It's worth reading---and I thank reader U.D. for sending it.

View full GSD edition

David Stockman: Good Riddance to Q.E.— It Was Just Plain Financial Fraud

QE has finally come to an end, but public comprehension of the immense fraud it embodied has not even started. In round terms, this official counterfeiting spree amounted to $3.5 trillion— reflecting the difference between the Fed’s approximate $900 billion balance sheet when its “extraordinary policies” incepted at the time of the Lehman crisis and its $4.4 trillion of footings today. That’s a lot of something for nothing. It’s a grotesque amount of fraud.

The scam embedded in this monumental balance sheet expansion involved nothing so arcane as the circuitous manner by which new central bank reserves supplied to the banking system impact the private credit creation process. As is now evident, new credits issued by the Fed can result in the expansion of private credit to the extent that the money multiplier is operating or simply generate excess reserves which cycle back to the New York Fed if, as in the present instance, it is not.

But the fact that the new reserves generated during QE have cycled back to the Fed does not mitigate the fraud. The latter consists of the very act of buying these trillions of treasuries and GSE securities in the first place with fiat credits manufactured by the central bank. When the Fed does QE, its open market desk buys treasury notes and, in exchange, it simply deposits in dealer bank accounts new credits made out of thin air. As it happened, about $3.5 trillion of such fiat credits were conjured from nothing during the last 72 months.

All of these bonds had permitted Washington to command the use of real economic resources. That is, to consume goods and services it obtained directly in the form of payrolls, contractor services, military tanks and ammo, etc and, indirectly, in the form of the basket of goods and services typically acquired by recipients of government transfer payments. Stated differently, the goods and services purchased via monetizing $3.5 trillion of government debt embodied a prior act of production and supply. But the central bank exchanged them for an act of nothing.

This right-on-the-money commentary appeared on David's website yesterday sometime---and my thanks go out to Roy Stephens for finding it for us.  West Virginia reader Elliot Simon sent this story on the same issue headlined "Financial Times: Q.E. Might Be a 'toxic legacy' Poisoning America".  It's worth reading as well.

View full GSD edition

Jim Rickards: "Central bankers are impotent"

Data coming out of the U.S. demonstrates lower mortgage yields and a surge in refinancings are adding to 4-year lows in gas prices to give consumers more disposable income. Jim says this isn’t as bullish as us what he thinks of the new data and also gives us his thoughts on divisions at the ECB.

The preamble to this must watch interview begins at the 4:20 minute mark of Russia Today's "Boom Bust" program---and it runs for a bit over eight minutes.  It was posted on the Internet site on Monday sometime---and I thank reader Harold Jacobsen for bringing it to our attention.

View full GSD edition

Mortgage Purchase Applications Plunge to 19-Year Low

Presented with little comment...because realistically what is there to say about a so-called 'housing recovery' when the volume of applications for home purchases is the lowest since August 1995. Keep believing that lower rates will support home prices... keep believing the Fed's Q.E. worked... or face facts, this is not your mother's housing market any more.

This short Zero Hedge story has three must see charts---and it was posted on their website at 11:03 a.m. EDT yesterday---and I thank reader 'David in California' for sending it along.

View full GSD edition

Economic, Political Discontent Make for a U.S. Midterm Double Punch

A double punch of economic and political dissatisfaction marks public attitudes in the closing week of the 2014 midterm campaign – a dynamic that reflects poorly on the president’s performance, bolstering his Republican opponents.

The discontent in the latest ABC News/Washington Post poll is palpable. Despite its fitful gains, seven in 10 Americans rate the nation’s economy negatively and just 28 percent say it’s getting better. In a now-customary result, 68 percent say the country’s seriously off on the wrong track.

There’s no respite politically. Six in 10 express little or no trust in the federal government to do what’s right. Fifty-three percent think its ability to deal with the country’s problems has worsened in the last few years; among likely voters that rises to 63 percent.

Views of the president’s performance suffer in kind. Barack Obama’s job approval rating, 43 percent overall, is virtually unchanged from his career-low 40 percent two weeks ago. A steady 51 percent disapprove, essentially the same all year. His ratings on the economy – still the country’s prime concern, albeit one of many – are similarly weak, a 10-point net negative score.

This article was posted on the Internet site at 7:00 a.m. EDT on Tuesday morning---and it's something I found in yesterday's edition of the King Report.

View full GSD edition

Tax evasion targeted in pact signed by 51 countries

Finance ministers and tax chiefs from 51 countries signed an agreement on Wednesday to automatically swap tax information beginning in 2017.

Canada was not among the first 51 countries to agree to the effort to end tax evasion, but said it would be among 35 more countries joining the agreement in 2018. The first signatories will have to invest more over the next two years to prepare their tax departments.

“We expect this will provide tax authorities across the world with the details of billions of pounds of assets held overseas,” U.K. Finance Minister George Osborne said as countries signed the agreement in Berlin.

“Under the agreement a wide range of information will be exchanged on offshore accounts, including account balances, interest payments and beneficial ownership, and this will greatly increase the ability of governments to clamp down on tax evaders and to ensure that what they owe, they pay," he said.

This article appeared on the Canadian Broadcasting Corporation website at 3:41 p.m. EDT on Wednesday---and it's courtesy of reader 'h c'.

View full GSD edition

U.K. faces 'debt time bomb' from ageing population

Britain's ageing population has created a "debt time bomb" that can only be defused through a combination of significant spending cuts, faster increases in the state pension age and ending universal free healthcare, according to a respected think-tank.

The Institute of Economic Affairs (IEA) warned that the Government would need to slash public spending by a quarter in order to get Britain's debt mountain down to sustainable levels.

In a set of radical proposals, the IEA called on the Government to end "unhelpful" policies such as the "triple lock guarantee" that ensures the state pension increases by the higher of inflation, average earnings or a minimum of 2.5pc every year.

"Politicians must wake up to the size of the debt time bomb in the UK. Older generations have voted themselves benefits that will indebt future generations, meaning crippling tax hikes for our children and grandchildren," said Philip Booth, editorial director at the IEA.

A not unfamiliar 'baby boomer' problem in all Western countries these days.  This article showed up on the Internet site at 5 a.m. GMT yesterday morning---and it's the second offering in a row from reader 'h c'.

View full GSD edition

Take your mortgage to the grave, older U.K. borrowers told

Older home owners will be told to take mortgages for life or leave their homes under plans to tackle Britain's interest-only mortgage crisis.

Several major banks will propose "lifetime" contracts to borrowers in their 50s and 60s who face a shortfall when their mortgage ends, The Telegraph understands.

The lenders will allow customers to repay just the interest on their debts until they die, at which point the properties will be sold and a large chunk of the proceeds passed to the bank.

"Lenders are trying to keep people in their homes, rather than repossess them, and these new deals will ensure the bank still owns most of the house when they die."

How morbid!  You couldn't make this stuff up.  This is another story from The Telegraph---and this one was posted there at 10 p.m. GMT on Tuesday evening.  It's the final offering of the day from reader 'h c', for which I thank him.

View full GSD edition

France to hand over first Mistral helicopter carrier on Nov 14 -- Russia

France may hand over the first of two Mistral helicopter carriers to Russia on November 14, Deputy Prime Minister Dmitry Rogozin said. He announced that Moscow had received an invitation to take delivery at France’s Saint-Nazaire shipyards.

“Rosoboronexport [Russia’s state owned arms exporter] has received an invitation to arrive in Saint-Nazaire on November 14, where 360 Russian sailors and 60 specialist trainers are already,” Rogozin said.

On that day, Vladivostok – the first of two Mistral-class helicopter carrier ships – should be handed over to Russia. The Deputy PM also assumed the second carrier, the Sevastopol, would also be in dock.

“We act from the fact that France must protect its own reputation as a reliable partner, including on issues of military cooperation," he said. France has always stressed that for them this would be “the litmus test of their national pride and sovereignty,” the Deputy PM added.

This Russia Today news item put in an appearance on their Internet site at 5:18 p.m. Moscow time on their Wednesday afternoon, which was 10:18 a.m. EDT in New York.  I thank Roy Stephens for sending it.

View full GSD edition

Deutsche Bank Replaces Executives as Legal Expenses Soar

Deutsche Bank AG, Germany’s biggest lender, is replacing its finance and legal chiefs as mounting litigation expenses wiped out quarterly profit and the firm begins talks to settle probes into alleged market rigging.

The bank swung to a net loss in the three months through September after setting aside 894 million euros ($1.1 billion) for litigation, the Frankfurt-based company said yesterday. It named Goldman Sachs Group Inc.’s Marcus Schenck to succeed Stefan Krause as chief financial officer and promoted Christian Sewing to the board to oversee the firm’s legal affairs.

“The number and level of executives being replaced point to a house-clean,” said Mark Williams, a former bank examiner for the Federal Reserve and now a lecturer at Boston University’s School of Management. “This type of regime change creates instability and you would only do it if you think it will restore stability.”

“The problems are much deeper than what we see” at Deutsche Bank, said Tom Kirchmaier, a fellow in the Financial Markets Group at the London School of Economics. “Why didn’t they promote someone from the inside for the CFO role? It’s puzzling. It would have been a natural choice.”

I posted a story about this in yesterday's column, but this Bloomberg piece, filed from Frankfurt at 5:01 p.m. MDT yesterday afternoon, is far more in depth---and I thank Elliot Simon for finding it for us.

View full GSD edition

Russia calls U.N. agency's conflict zone risk proposals 'superficial'

Russia, which the United States has accused of backing Ukrainian rebels who shot down a Malaysian airliner in July, called new proposals from the United Nations aviation body on mitigating risks over conflict zones rushed and "superficial", according to a document obtained by Reuters.

The  International Civil Aviation Organization (ICAO) launched a task force in July to look at ways to better share information about risks above conflict zones. The task force has laid out 12 proposals, seen by Reuters and confirmed by sources at the Montreal-based agency.

The Russian submission to the ICAO Council, which was also signed by Bolivia, says the agency "practically has lost" its role in investigating the downing of Malaysian Airlines MH17 and criticized a pilot program to share intelligence.

It said the agency’s pursuit of a centralized intelligence sharing mechanism was outside its mandate, and could lead to false information being given to pilots.

This Reuters article, co-filed from Montreal and Toronto, appeared on their website at 4:12 p.m. EDT on Wednesday afternoon---and it's another contribution from Roy Stephens.

View full GSD edition

Rosneft "Radical" Sanctions Retaliation Proposal Sends Russian Bonds, Currency Plunging

10-year Russian bond yields have broken above 10%, trading at the highest yields since 2009 as the Ruble plunges once again to fresh record lows against the dollar. These significant moves come on the heels of two notable headlines overnight.

First, German exports to Russia slumped 26.3% YoY in August (down a stunning 16.6% year-to-date with vehicle exports plunging 27.7%) as sanctions batter bilateral trade. Secondly, Rosneft has proposed what is being described as "radical" reactions to the West's sanctions, which the Kremlin has (for now) denied.

This Zero Hedge piece was posted on their website at 10:06 a.m. yesterday morning---and it's the second offering of the day from reader 'David in California'.  It's worth reading.

View full GSD edition

#62: Russia jumps record 30 places in ‘Doing Business’ ranking

Russia is now ranked 62nd in the World Bank’s new 2014 Doing Business report, which measures the ease of doing business in 189 countries worldwide. The country climbed 30 positions from 92nd spot in 2013.

Russia is ahead of Moldova in 63rd place and behind Greece in 61st.

Singapore, New Zealand, Hong Kong, Denmark, and South Korea are the top five countries in terms of ease of doing business in this year’s report.

The 189 economies are evaluated on how close their business regulations compare to the best global practices, with a higher score for a more efficient business climate and stronger legal institutions.

This news item appeared on the Russia Today website at 10:44 a.m. Moscow time on their Wednesday morning---and it's the final offering of the day from Roy Stephens, for which I thank him.

View full GSD edition

Hugo Salinas Price: The Fall in International Reserve Assets

Something important has happened since August 15, this year. I have been following  global central bank "international reserve assets" (excluding gold)  as tallied by Bloomberg, for the past 18 years, and I have seen them increase steadily over the whole of that time.  My source has been Doug Noland's "Credit Bubble Bulletin" over at

In September of last year, I wrote an article, "The Stalling Growth of International Reserves" published on my website,

Now the quite extraordinary news is that International Reserve Assets are not just stalling, they are actually going into reverse.

Of course repricing gold would fix the International Reserves situation at once, dear reader---and that may be in the cards at some point.  This brief article put in an appearance on the website yesterday---and I found it embedded in a GATA release.  It's worth the 90 seconds of time it will take to read it.

View full GSD edition

Lawrence Williams: The new London gold ‘fix’ – the battle has commenced

By virtue of having already developed benchmark setting software for the other principally traded precious metals one might assume that the Thomson Reuters/CME and LME proposals might be the front runners. 

However from a purely competition aspect the prospect of the organisation which runs the principal US gold trading market in COMEX (the CME) also setting the London benchmark price smacks of an almost monopolistic opportunity which might stand against it – although it obviously didn’t in the case of silver. 

The selection of CME might also generate apoplectic opposition from the North American gold investment community, indeed from gold bugs everywhere, given that they see the CME’s COMEX market as being uncontrollably rigged by some major banks through the use of gold futures (utilising vast paper gold transactions, hugely in excess of the amounts of physical gold available) to control (manipulate) physical market pricing.

This commentary by Lawrie appeared on the Internet site on Wednesday sometime---and I found it all by myself.

View full GSD edition

Greenspan: The Price of Gold Will Rise

Q: "Why do central banks (still) own gold?"

Greenspan: “This is a fascinating question.”  He did not answer the question, but he did point out: “Gold has always been accepted without reference to any other guarantee.”

While Greenspan did not want to comment on current policy, he was willing to give a forecast on the price of gold, at least in a Greenspanesque way.

Q:  Where will the price of gold be in 5 years?” 

Greenspan: “Higher.” 

Q: How much?” 

Greenspan: “Measurably.

It's a safe bet, considering Greenspan's ability at understatement---"measurably" means it will rise by a lot.  This commentary, which falls into the must read category, was posted on the Internet site on Wednesday---and the first reader through the door with the story was Ken Hurt.  Zero Hedge put its own spin on this in an article headlined "Alan Greenspan: Q.E. Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold".  Reader 'David in California' sent that one our way.

View full GSD edition

Oct 29, 2014

Fed Will Likely Signal No Rate Hike Anytime Soon

The global economy has slumped. Turmoil has gripped financial markets. And the U.S. job market, despite steady gains, still isn't fully healthy.

Yet when the Federal Reserve meets this week, few foresee any major policy changes. The Fed is expected to complete a bond-buying program, which was intended to keep long-term interest rates low. And, to support the economy, it will likely reiterate it's in no rush to raise its key short-term rate.

The economy the Fed will discuss has been strengthening, thanks to solid consumer and business spending, manufacturing growth and a surge in hiring that's lowered the unemployment rate to a six-year low of 5.9 percent.

Still, global weakness poses a potential threat to U.S. growth. The housing industry is still struggling. And Fed Chair Janet Yellen has stressed that while the unemployment rate is close to a historically normal level, other gauges of the job market remain a concern. These include stagnant pay; many part-time workers who can't find full-time jobs; and a historically high number of people who have given up looking for a job and are no longer counted as unemployed.

And don't forget that Jim Rickards is on record as saying the interest rates will never rise again.  I concur.  This short AP story, filed from Washington, appeared on Internet site at 12:31 p.m. EDT on Monday---and I found it in yesterday's edition of the King Report.

View full GSD edition

U.S. Banks See Worst Outflow of Money in ETF Since 2009

The Financial Select Sector SPDR, an exchange-traded fund targeting banks and investment firms, had the biggest withdrawal last week since 2009 amid concern that low interest rates and market swings will hurt profits.

Investors pulled $913.4 million from the $17.5 billion ETF, whose top holdings include Berkshire Hathaway Inc., Wells Fargo & Co. and JPMorgan Chase & Co., a shift that turned its flow of funds negative for the year. About 143 million shares of the ETF have been borrowed and sold to speculate on declines, the most since June 2012, according to exchange data compiled by Bloomberg.

Banks have waited for years for higher rates and more robust trading to boost revenue from lending and market-making. Weaker-than-expected global growth could prompt the U.S. central bank to slow the pace of eventual interest-rate increases, Federal Reserve Vice Chairman Stanley Fischer said Oct. 11. The severity of market swings this month also boosts the risk that banks will incur losses while facilitating client bets, and it may slow mergers and acquisitions.

This Bloomberg article appeared on their website at 10:00 p.m. Denver time on Monday evening---and I thank reader 'David in California' for sending it along.

View full GSD edition

U.S. Home Ownership Rate Drops to 1983 Levels: Here's Why

The last time U.S. home ownership declined down to 64.4% (which the Census Bureau just reported is what U.S. home ownership declined to from 64.7% in Q2), was back in the fourth quarter of 1983.

It goes without saying that this is just about the most bearish news possible for those few who still believe in the American home ownership dream.

Of course, those who have been following real-time rental market trends would be all too aware there is no rebound coming to the home ownership rate. The reason is simple: increasingly fewer can afford to buy, instead having no choice but to rent, which in turn has pushed the median asking rent to record highs. In fact in the past two quarters, the asking rent was just $10 shy of its time highs at $756 per month.

This very worthwhile read, along with some first-rate charts, appeared on the Zero Hedge website at 11:18 a.m. EDT on Tuesday morning---and I thank Manitoba reader U.M. for sharing it with us.

View full GSD edition

Sprott Money Weekly Wrap-Up With Your Humble Scribe

Sprott Money's Jeff Rutherford and I spent 6:11 minutes talking to each other last Friday, but for technical reasons the audio link wasn't available until yesterday, so here it is now.

View full GSD edition

Mike Maloney: Did Hillary Really Say That?

This is not a democrat or republican issue. This is about the people in Washington being so disconnected from reality that they are dangerous...they don't understand how the economy works.

This 21:20 minute audio interview with Mike was posted on the Internet site on Tuesday sometime---and I must admit that I haven't had time to listen to it yet.

View full GSD edition

Lloyds Cuts 9,000 jobs and shuts 150 branches as profits leap

Lloyds has predicted that visits to its branch counters will halve over the next three years after a £1bn investment in digital technology and the closure of 200 high street locations.

The bank on Tuesday unveiled a three-year cost-cutting plan that will see 9,000 job losses and its branch estate reduced by 6pc as it unveiled a 35pc rise in operating profits and set aside another £900m related to PPI mis-selling.

However, it said customers would benefit from an increase in digital services and committed to shutting branches at a slower rate than its rivals.

This article appeared on the Internet site at 3:59 GMT yesterday---and I thank reader 'h c' for sending it.  And the 'thought police' over at The Telegraph have given the story a brand new headline, it's now a much softer sounding "Lloyds Bank closures: Branch transactions to halve within three years"

View full GSD edition

Rampant financial crime in City of London eroding public trust - BoE

A top Bank of England (BoE) official warns widespread financial crime in the City of London is eroding public trust. The BoE’s criticism surfaced as it launched a review to tackle market manipulation.

In her first public address since adopting the position of BoE Deputy Governor, Nemet Minouche Shafik denounced the actions of UK traders in foreign exchange, currencies and bonds markets, warning financial misconduct in these sectors goes well beyond a few rogue financiers.

Referencing LIBOR riggers’ behavior as unacceptable, she suggested fines for such fraudulent activity were inadequate and signified “salt rubbed into the wounds to public confidence in financial markets.”

She didn't mention the precious metal markets---and I'm sure that was deliberate.  This must read article appeared on the Russia Today website at 7:58 p.m Moscow time on their Tuesday evening, which was 12:58 p.m. EDT in New York.  I thank Harry Grant for sliding this into my in-box in the wee hours of this morning.

View full GSD edition

Life after Libor: bankers to face personal fines for rigging prices

Banks could face a significant new regulatory crackdown on their wholesale market activities as the financial authorities seek to prevent a repeat of the scandals that have destroyed the reputation of the sector in recent years.

The Bank of England – in conjunction with the Financial Conduct Authority and the Treasury – yesterday published a wide-ranging consultation document which holds out the possibility of a radical tightening of the supervisory regime for City institutions that trade in the foreign exchange, interest rate derivatives, commodities and also bond and equity markets.

The proposals include a beefing up of electronic surveillance tools to monitor traders’ activities and a new regime of fines on employees who breach internal guidelines on abuse. Another bold suggestion is to overhaul the infrastructure of capital markets, forcing open new electronic trading platforms to increase competition in markets that are often dominated by a relatively small number of firms.

This story put in an appearance on the Internet site yesterday sometime---and it's the second offering of the day from reader 'h c'.

View full GSD edition

ECB stress tests vastly understate risk of deflation and leverage

The eurozone’s long-awaited stress test for banks has been overtaken by powerful deflationary forces and greatly understates the risk of high debt leverage in a crisis, a chorus of financial experts has warned.

George Magnus, senior advisor to UBS, said it was a “huge omission” for the European Central Bank to ignore the risk of deflation, given the profoundly corrosive effects that it can have on bank solvency. “Most of the eurozone periphery is already in deflation. They can’t just leave this out of their health check. It is a matter of basic due diligence,” he said.

The ECB’s most extreme “adverse scenario” included a drop in inflation to 1pc this year, but the rate has already fallen far below this to 0.3pc, or almost zero once tax effects are stripped out. Prices have fallen over the past six months in roughly half of the currency bloc, and the proportion of goods in the EMU price basket in deflation has jumped to 31pc.

“The scenario of deflation is not there, because indeed we don’t consider that deflation is going to happen,” said the ECB’s vice-president, Vitor Constancio.

This Ambrose Evans-Pritchard commentary was posted on The Telegraph's website at 7:35 p.m. GMT on Monday evening---and it's the third and final offering of the day from reader 'h c'.

View full GSD edition

U.K. opts out of Mediterranean migrant rescue mission

Britain has said it will not support the European Union’s planned search and rescue operations to help migrants left stranded in the Mediterranean Sea, even as Italy prepares to wind down its own rescue missions, which have saved thousands of lives.

The U.K.’s Foreign Office argued on Tuesday that the E.U.’s plans to patrol the Mediterranean would only encourage more migrants to attempt the dangerous sea crossing.

The operation, codenamed “Triton”, is headed by the European Union border agency Frontex and is set to begin in November.

"We do not support the planned search and rescue operations in the Mediterranean," said Baroness Joyce Anelay, a Foreign Office minister. "We believe that they create an unintended ‘pull factor’… thereby leading to more tragic and unnecessary deaths."

This news item appeared on the Internet site yesterday some time---and I thank South African reader B.V. for sending it our way.

View full GSD edition

Sweden's Crown Slides as Riksbank Cuts Rates to Zero

The Swedish crown hit a four-year low against the dollar and a four-month trough against the euro on Tuesday after Sweden's central bank surprised investors by cutting interest rates to a record low of zero percent.

Most analysts had forecast the Riksbank would lower its main interest rate, the repo rate, to 0.1 percent from 0.25 percent to fight a risk of deflation, and the central bank went a step further by forecasting a lower rate path for the future.

Riksbank chief Stefan Ingves said the central bank is ready to take unconventional measures that analysts said could include asset purchases, intervening in the currency market to sell crowns or imposing a cap like the Swiss National Bank.

This Reuters article, filed from New York, showed up on their Internet site at 3:25 p.m. EDT on Tuesday afternoon---and I found it embedded in a GATA release.  Reader U.M. sent the same story, but this one was from The Telegraph.  It's headlined "How low can you go? Sweden cuts interest rates to zero".

View full GSD edition

Despite "Healthy" Stress Test, Deutsche Bank Replaces CFO With Goldman Sachs Partner

Deutsche Bank executives are dropping like flies. Just days after receiving a clean bill of health from Europe's oh-so-stressful stress-tests, Deutsche Bank has decided that longtime finance chief Stefan Krause needs to be replaced.

Perhaps most interesting is the bank that faces 'serious financial reporting problems' in the U.S. and has a derivatives book literally the size of (actually 20 times bigger) than Germany, has decided the right man for the job is an ex-Goldman Sachs partner. Marcus Schenck, according to the WSJ, will replace Krause, having worked at German utility E.ON until last year when he joined Goldman.

This Zero Hedge news item appeared on their website at 1:27 p.m. EDT on Tuesday afternoon---and it's the second offering of the day from reader 'David in California'.

View full GSD edition

Poverty begins to bite in Germany

Almost a sixth of the German population is living below the poverty line, according to the country’s Federal Statistics Bureau.

The bureau on Monday reported on its website that about 13 million people, or 16.1% of the population, earns less than 60% of the average earning of the entire population. This is the guideline set out by the European Union (EU) to establish whether a person may be classified as living below the poverty line.

In 2013 this limit lay at €979 (about R13 700) per month. For a family of two parents with two children, it was €2 056 (about R28 900) per month.

Women and the aged were more vulnerable, according to the bureau. Also the unemployed above 18 years (a full 69.3%) were the victims of poverty. Only 8.6% of those with jobs lived below the poverty line.

This article, filed from The Hague, showed up on the Internet site at 19:02 SAST yesterday---and I thank reader B.V. for his second contribution to today's column.

View full GSD edition

E.U. clears French, Italian budgets after changes

The European Union's head office said Tuesday it is giving the 2015 French and Italian budgets a provisional green light, saying last-minute commitments to keep deficits down kept them within limits.

E.U. Monetary Affairs Commissioner Jyrki Katainen said that he could not "immediately identify cases of 'particularly serious non-compliance'" with EU rules that force the euro member states to observe strict limits on spending.

France and Italy were accused of being too profligate in their budgetary spending plans at a time when the E.U. and the euro zone have been advocating strict austerity as the best way to beat the financial crisis.

Without naming any member state, Katainen said those that had come under initial suspicion of failing to play by those austerity rules "have responded constructively to our concerns."

This AP story, filed from Brussels, was picked up by the Internet site yesterday sometime---and I thank West Virginia reader Elliot Simon for bringing it to our attention.

View full GSD edition

Russia to recognize separatist elections in Ukraine's Luhansk and Donetsk

Russia will recognize separatist elections in Ukraine's restive eastern region, Russian Foreign Minister Sergey Lavrov said Tuesday.

"Elections due to be held in the self-proclaimed Luhansk and Donetsk People's Republics on November 2 will be very important from the point of view of the legitimization of power," Lavrov told LifeNews television and the Izvestia newspaper.

Moscow's support for Nov. 2 elections, however, violates the agreed upon Minsk Protocol that established Dec. 7 as the date for early elections in Ukraine's Donetsk and Luhansk regions.

On Monday, U.S. President Barack Obama delivered a message to Moscow, urging Russia to support "legitimate local elections on December 7, in keeping with the agreement that Russia and separatist representatives signed in Minsk, Belarus, on September 5, 2014."

The above four paragraphs are all there is to this short UPI article, filed from Moscow, that appeared on their Internet site at 10:38 a.m. EDT yesterday morning---and it's courtesy of Roy Stephens.

View full GSD edition

China Fake Invoice Evidence Mounts as Hong Kong Figures Diverge

The gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened in September to the most this year, suggesting fake export-invoicing is again skewing China’s trade data.

China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5 billion difference, according to government data compiled by Bloomberg. Hong Kong’s imports from China climbed 5.5 percent from a year earlier to $24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to $37.6 billion, according to mainland data on Oct. 13.

While China’s government has strict rules on importing capital, those seeking to exploit yuan appreciation can evade the limit by disguising money inflows as payment for goods exported to foreign countries or territories, especially Hong Kong. The latest trade mismatch coincided with renewed appreciation of China’s currency, leading analysts at banks and brokerages including Everbright Securities Co. and Australia & New Zealand Banking Group Ltd. to question the export surge.

This Bloomberg news item, filed from Beijing, was posted on their website at 9:31 p.m. Mountain Daylight Time on Monday evening---and it's another offering from reader U.M.

View full GSD edition

New London gold benchmark to go live in early Q1/2015 - LBMA

A new electronic gold price mechanism is expected to be in operation early in the first quarter of 2015, replacing the century-old gold benchmark, the London Bullion Market Association said on Monday.

The gold industry group said it has launched a survey to request further feedback from market participants on the proposed solutions. Participants will be asked to confirm which solution they will be willing to participate in, the LBMA said.

LBMA said it expects a market consensus will emerge in November after consultation with regulators. In addition, LBMA will undertake testing in December ahead of the launch early next year.

Isn't this special, dear reader!  China, the biggest gold producing and consuming country is not represented---and neither is India, the #2 user of the metal.  Is it just me, or is there something wrong with this picture?  This gold-related Reuters article was posted on their Internet site at 3:38 p.m. EDT on Monday afternoon---and once again I thank reader U.M. for sending it.

View full GSD edition

Airport trash bags go under the 'gold' scanner in India

Customs officials at Karipur Airport, which has emerged as one of the top four hotspots for gold smuggling into the country, now have a new headache in the form garbage gold.

With smugglers depositing contraband gold in garbage bags inside flights and retrieving them later, possibly with the help of garbage clearing staff, customs have been forced to take the unprecedented step of conducting X-ray scans on trash bags in flights arriving from the Gulf.

Customs officials said Karipur airport could possibly be the only airport in the country where garbage bags and even food trolleys have to be scanned through the X-ray machine for hidden gold.

The decision was taken following intelligence inputs, which proved right as officials seized 2 kg of gold from one such bags from an Air Arabia flight last week.

This very interesting article, filed from Kozhikode, India, appeared on The Times of India website at 12:27 a.m. IST this morning---and it's the final offering of the day from Manitoba reader U.M., for which I thank her.  It's worth reading.

View full GSD edition

Lawrence Williams: Hong Kong gold exports to China pick up strongly but...

...that’s only part of the story. SGE withdrawals seem to be going through the roof – and what about India?

All indicators suggest that there could indeed be a very large supply deficit building. But the markets seem to pay no attention whatsoever given they are no longer driven by supply/demand factors but by the [COMEX] futures markets involving massive amounts of paper gold.

We don’t know what the answer is here, and for how long this imbalance can go on, but it does colour our views as to the long-term gold price. One day gold will surely take off but whether it’s this week, next week, next month, next year or 10 year’s time still remains open to question.  It just depends on how long the big money, and perhaps governments, can keep playing the futures markets to keep commodity prices working to their advantage.

This must read story by Lawrie was posted on the Internet site yesterday---and I found it all by myself.

View full GSD edition

Oct 28, 2014

Christmas in October: Desperate Measures

The desperation of Wal-Mart and most of the other mega-retail chains is no more clearly evident than in their relentlessly ridiculous acceleration of holiday marketing displays. I was flabbergasted when I saw Halloween candy, decorations and costumes in row after row BEFORE Labor Day at my local Wal-Mart. Selling Halloween candy two months before Halloween is idiotic and a sure sign of desperation. Retailers have run out of merchandising ideas. I wouldn’t even consider buying Halloween candy until the week before Halloween. Do Wal-Mart freaks of the week actually buy Halloween merchandise in September?

So last week, still a full two weeks before Halloween, Wal-Mart had already converted their entire garden center into a Christmas wonderland of cheap mass produced Chinese cookie cutter Christmas decorations and lights that will blow out after three hours of use. They had also converted aisles at the front of the store to Christmas displays. Who the hell shops for Christmas crap in October? There is nothing like having cheap Chinese Christmas crap available for over two months to create a sense of urgency to buy. Wal-Mart and the rest of the mega-retailers have got nothing. They have no original merchandising ideas. They don’t even try anymore. They source low quality goods from China and compete solely on price. I can’t wait for the Easter candy to appear on Wal-Mart’s shelves in late December.

This article, complete with some 'pithy prose', appeared on Internet site on Saturday---and I thank reader U.D. for passing it around on the weekend.

View full GSD edition

Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

This news item appeared on The New York Times website on Saturday---and it's the second offering in a row from reader U.D.

View full GSD edition

The Day The POMO Died

For those who follow the Fed's daily intervention in the stock market, today is a historic, if bittersweet day: this is the day when the Permanent Open Market Operations (or POMO) as a result of the QE3 program launched in December 2012, finally die (at least until they are reincarnated yet again).

Today, at 11:00 am, the NY Fed's market desk will conclude its 933rd POMO since August 25 of 2005, when it will inject just about a $1 billion in the stock market in the form of a $0.85-$1.05 billion buyback of long-end bonds. And with that, Simon Potter's open market operations desk located on the 9th floor of Liberty 33, will be put on temporary hiatus.

And with that, QE3 will end.  Or not.

This Zero Hedge piece, with a couple of excellent charts, is worth your while---and I thank Manitoba reader U.M. for her first contribution to today's column.

View full GSD edition

Negative interest rates threaten to destroy not just savers but IMF as well

The International Monetary Fund has been forced to change the calculation of its most important interest rate after aggressive monetary easing around the world threatened to turn it negative.

Late on Friday the IMF said it was introducing a floor of 0.05 per cent for the interest rate on Special Drawing Rights, its own form of international currency.

The IMF's move shows how global financial conditions are now easier than they have ever been, more than five years after the end of the Great Recession, leading to the lowest interest rates in its 68-year history.

This Financial Times news item appeared on their website last Friday---and it's posted in the clear in this GATA release.  The FT headline reads "IMF Introduces Floor on Interest Rates".

View full GSD edition

Canadian household debt hits new high

The ratio of credit market household debt to disposable income hit 163.4 per cent in the second quarter, up from 161.8 per cent in the previous period, the agency said.

Credit market debt strips out trade accounts payable, or short-term credit — normally interest free in order to encourage commerce — that suppliers extend to small businesses, including home businesses.

That number is also about where households in the United States and the United Kingdom stood before home values crashed.

"Today’s report indicates that Canadian households are more financially vulnerable than had previously been thought," said TD economist Diana Petramala in a commentary.

This story appeared on the Internet site back on October 15---and I thank reader 'h c' for sending it our way.

View full GSD edition

E.U. commission warns U.K. about its rebate

The UK has to pay its outstanding €2.1bn bill by 1 December or face monthly penalties, EU budget commissioner Jacek Dominik said Monday (27 October) in a press conference.

Dominik said he was "surprised" to witness the "anger" of British Prime Minister David Cameron who last week vowed not to pay the bill at such short notice.

The commissioner said British officials knew since 17 October, when all member states were presented with their corrected share of the EU budget, based on changes in their gross national income (GNI) compared to what they had projected.

"What is extremely important is to remember that these figures are presented by member states based on their own statistics and approved by Eurostat," Dominik said.

This news item, filed from Brussels, showed up on the Internet site at 6:07 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens.

View full GSD edition

ECB fails 25 banks in health check but problems largely solved

Roughly one in five of the euro zone's top lenders failed landmark health checks at the end of last year but most have since repaired their finances, the European Central Bank said on Sunday.

Painting a brighter picture than had been expected, the ECB found the biggest problems in Italy, Cyprus and Greece but concluded that banks' capital holes had since chiefly been plugged, leaving only a modest €10 billion ($12.7 billion) to be raised.

Italy faces the biggest challenge with nine of its banks falling short and two still needing to raise funds.

The test, designed to mark a clean start before the ECB takes on supervision of the banks next month, said Monte dei Paschi had the largest capital hole to fill at €2.1 billion.

Whistling past the graveyard again, I'm sure.  This Reuters news item, filed from Frankfurt, was posted on their Internet site at 4:18 p.m. EDT on Sunday---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.  Here a story from The Telegraph on the same issue.  It's headlined "ECB: 25 banks not strong enough to withstand another crisis".  I thank Roy Stephens for this one.

View full GSD edition

Three reasons why the ECB bank stress tests are sub par

For lovers of contingent capital, asset quality reviews, and tier one capital ratio, it was like Christmas.

As the clock struck 11 in London, the European Central Bank pushed out its modestly entitled “comprehensive assessment” of the financial health of the biggest banks in the Eurozone, which ran to 178 pages.

At the same hour, the European Banking Authority did likewise, pushing out its 51-page report, not to mention hundreds of pages of addendums, additional tables and charts.

For those who know their CRDs from their CRRs – that’s capital requirements directive and capital requirements regulation – the documents were a treasure trove of detailed analysis of the state of the continent’s banks as at December 31 last year.

This in-depth report by The Telegraph's Executive Business Editor appeared on their website at 7:04 p.m. GMT on Sunday evening---and it's courtesy of reader 'h c'.

View full GSD edition

The Scariest Number Revealed Today: $1.114 Trillion In Eurozone Bad Debt

As we previously reported, the ECB's latest stress test was once again patently flawed from the start. Why? Because as we noted earlier, in its most draconian, "adverse" scenario, the ECB simply refused to contemplate the possibility of deflation. And here's why. Buried deep in the report, on page 75 of 178, is the following revelation which contains in it the scariest number presented to the public today.

"Due to the fact that on average banks' internal definitions were less conservative than the simplified EBA approach, the application of the simplified approach led to an increase in NPE stock of €54.6 billion from €743.1 billion to €797.7 billion. The CFR and the projection of findings led to an additional increase in NPE of €81.3 billion, resulting in a total increase €135.9 billion to €879.1 billion of post-CFR NPEs across the participating banks as a result of the AQR. The impact of the application of the EBA simplified approach and the credit file review on the stock of NPEs varied amongst debtor geographies, with overall increases among SSM debtor geographies ranging from 7% to 116%."

Translated: due to a lotta ins, lotta outs, lotta what-have-you's, and the now traditional "fluidity" when it comes to European term definitions (recall that as of this year, in Europe hookers and blow contribute to (estimated) GDP otherwise the Eurozone would be in deep triple-dip recession, if not outright depression by now) the stress test, while concluding that Europe's banks are "safe", also uncovered some €136 billion in previously undisclosed NPE or "Non-Performing Exposure", aka Bad Loans - loans which will never be repaid.

Which in turn leads to the new bad loan total amount (that will also in the coming quarters be revised sharply higher) among Eurozone banks: a whopping €879 billion, or some $1.114 trillion at today's exchange rate. This amount to a stunning 9% of the the Eurozone's GDP and is precisely the reason why the ECB can't possibly even conceive of deflation, as without the much needed rising prices to inflate away this NPL debt tumor, Europe's banks are all insolvent, regardless of what today's stress test may have revealed about just a paltry 25 of them.

The above four paragraphs are the 'juice' of this Zero Hedge article---and it falls into the must read category.  It was posted on their Internet site at 7:10 p.m. EDT on Sunday evening---and I found it in yesterday's edition of the King Report.

View full GSD edition

Why Germany's households are more fragile than you think

On Sunday, the E.U. released the results of its latest round of testing on the financial health of the continent's lenders.

Meanwhile, the number crunchers at the European Central Bank have also been putting Europe's households under the microscope.

In a new working paper titled "Financial Fragility of Euro Area Households", the ECB examines how different parts of Europe may fare if economic conditions take a turn for the worse.

Specifically, the paper models what impact rising unemployment, falling house prices, and higher interest rates could have on household balance sheets, and the potential consequences for financial stability in the Continent.

The survey of 51,000 households across 14 euro-area countries reveal some surprising results about which countries are most vulnerable to a severe economic shock.

This interesting analysis appeared on The Telegraph's website at 5:00 a.m. GMT on Monday morning---and it's another offering from reader 'h c'.

View full GSD edition

Chief MH17 Investigator on German Claims: 'We Will Need Evidence'

SPIEGEL: Germany's foreign intelligence agency, the Bundesnachrichtendienst (BND), believes that pro-Russian separatists shot down the aircraft with surface-to-air missiles. A short time ago, several members of the German parliament were presented with relevant satellite images. Are you familiar with these photos?

Westerbeke: Unfortunately we are not aware of the specific images in question. The problem is that there are many different satellite images. Some can be found on the Internet, whereas others originate from foreign intelligence services.

SPIEGEL: High-resolution images -- those from US spy satellites, for example -- could play a decisive role in the investigation. Have the Americans provided you with those images?

Westerbeke: We are not certain whether we already have everything or if there are more -- information that is possibly even more specific. In any case, what we do have is insufficient for drawing any conclusions. We remain in contact with the United States in order to receive satellite photos.

This brief interview put in an appearance on the German website at 5:12 p.m. Europe time on their Monday afternoon---and my thanks go out to Roy Stephens for this story.  Roy also sent this Russia Today story from yesterday evening Moscow time---and it's headlined "MH17 might have been shot down from air – chief Dutch investigator".

View full GSD edition

Spain's export-led recovery comes at a price

Spain’s car industry has come back from the dead, saved by drastic wage cuts that transform the social character of Europe.

The French group Renault has restarted night shifts at its plant in Valladolid this month for the first time in a decade as demand surges for its snazzy bi-tonal Captur, much of it from South Korea of all places.

It is a moment that traumatised workers here in the heartland of old Castile never expected to see again after Spain’s economy crashed into depression six years ago, and then crashed yet deeper before hitting rock bottom in 2012. “We all thought this factory was going to be closed. It was a terrible time,” said Luis Estevez, a manager of the assembly plant.

Other countries may be mothballing lines or cutting shifts as Europe flirts with a triple-dip recession, but Spain’s 17 car factories are firing on all cylinders. Output has risen 20pc over the last two years, on track to reach 2.4m this year and 3m by 2017, leaving Britain, Italy, Russia and, above all, France ever further behind.

This Ambrose Evans-Pritchard article showed up on the Internet site at 1:25 p.m. BST on Saturday---and it's another story courtesy of Roy Stephens.

View full GSD edition

Thousands of Hungarians protest against tax on Internet traffic

Thousands of Hungarians protested in Budapest on Sunday against a planned new tax on Internet data transfers, which they said would not only increase the tax burden but would also curb fundamental democratic rights and freedoms.

Prime Minister Viktor Orban's government, which has been widely accused of adopting anti-democratic policies, first unveiled plans for the new tax late on Tuesday in the draft 2015 tax bill submitted to parliament.

The draft tax bill contains a provision for Internet providers to pay a tax of 150 forints (0.38 pounds) per gigabyte of data traffic, though it would also let companies offset corporate income tax against the new levy.

"The move... follows a wave of alarming anti-democratic measures by Orban that is pushing Hungary even further adrift from Europe," the organisers of "100,000 against the Internet tax" said in a press release.

This Reuters article, filed from Budapest, appeared on their website at 8:39 p.m. GMT on their Sunday evening---and I thank West Virginia reader Elliot Simon for finding it for us.

View full GSD edition

IS group bids to cut off Kobane, Iraqi Kurds ready to join fight

Islamic State (IS) group fighters made a new bid to cut off the Syrian border town of Kobane from neighbouring Turkey Saturday as preparations gathered pace to deploy Iraqi Kurdish reinforcements.

The Kurdish regional government in northern Iraq unveiled plans on Friday for up to 200 well-trained peshmerga to join Syrian Kurdish forces defending Kobane in the coming week.

Kurdish news agency Rudaw said the first contingent could head to Kobane as early as Sunday but there was no immediate confirmation of that timetable.

Peshmerga ministry spokesman Halgord Hekmat declined to specify what route the Iraqi Kurdish forces would take, but they are expected to travel overland through Turkey, which has said it will allow them transit.

This article was posted on the Internet site on Saturday some time---and I thank Roy Stephens for sending it our way.

View full GSD edition

China launches direct trade between yuan, Singapore dollar, bypassing U.S. dollar

China on Monday announced direct trading between the renminbi and Singapore dollar beginning Tuesday, marking another step toward internationalizing the Chinese currency.

The announcement by China Foreign Exchange Trading System extended the yuan's list of direct onshore trade to more major currencies, including the U.S. dollar, the euro, British sterling, Japanese yen, Australian dollar, New Zealand dollar, Malaysian ringgit, and Russian ruble.

The move aims to boost bilateral trade and investment, facilitate the use of the two currencies in trade and investment settlement, and reduce exchange costs for market players, the foreign exchange trading system said in a statement.

The move is also expected to help Singapore in its bid to become a renminbi offshore center.

This news item appeared on the Internet site yesterday---and I found it over at the Internet site.

View full GSD edition

London hedge fund Red Kite holds more than half LME copper stocks - WSJ

London-based hedge fund Red Kite Group currently holds more than half of London Metal Exchange copper inventories, The Wall Street Journal reported, citing LME traders and brokers.

LME data shows that there is a dominant holder of the LME's copper stocks, accounting for between 50-80 percent of total metal holdings. That would be worth around $534-$854 million based on prices of $6,675 per tonne.

Total LME copper stocks are currently at 159,550 tonnes.

The WSJ cited comments from eight traders and brokers working for different firms active on the LME who said they believe Red Kite Group was the one buying.

The above four paragraphs are all there is to this short Reuters piece that appeared on their Internet site at 9:04 a.m. GMT yesterday morning---and I thank Elliot Simon for his second offering in today's column.  Reader M.A. sent the Zero Hedge spin on this headlined "Copper Surges After Report Mysterious London Buyer Has Cornered Up to 90% of Market".

View full GSD edition

Greenspan says he's not aware of gold price suppression through central bank leasing

The opportunity to question former Federal Reserve Chairman Alan Greenspan about central bank intervention in the gold market was spectacularly fumbled today during Greenspan's appearance at the New Orleans Investment Conference.

Interviewing Greenspan, conference moderator Gary Alexander asked if the former Fed chairman was aware of efforts by central banks to suppress the price of gold by leasing the metal to bullion banks, which would sell the metal into the market.

"I'm not aware of anything" like that, Greenspan replied, though of course central bank gold leasing to suppress gold's price was famously a subject of Greenspan's testimony to Congress in July 1998.

During a break in the interview, your secretary/treasurer urged Alexander to follow up with a question about that testimony -- and he did, but only to misquote it. Alexander asked Greenspan if he remembered testifying to Congress that "the Fed," not central banks generally, stood ready to buy gold, not lease it, to influence the price.

Greenspan replied that it was "not conceivable that I would have said that" -- and of course he never did.

This must read GATA release was posted on their website on Saturday afternoon CDT.

View full GSD edition

Gold price suppression documents cited in debate at New Orleans conference

Documents that were included in a PowerPoint presentation by your secretary/treasurer during his debate with Doug Casey of Casey Research on Thursday, October 23, at the New Orleans Investment Conference -- a debate whose proposition was "Gold Manipulation: Real or Imagined?," with your secretary/treasurer arguing that it is real -- are cited below, though, because of lack of time, not all of them were reviewed during the debate.

There are a lot of links in this post that I found on the Internet site yesterday.  So, if you're going to wade through them, I'd start by topping up your coffee if I were you.

View full GSD edition

Bill Holter analyzes gold manipulation debate at New Orleans conference

Market analyst Bill Holter, who writes for the Miles Franklin coin and bullion shop in Minnesota and GATA Chairman Bill Murphy's, analyzes the gold manipulation debate between your secretary/treasurer and Doug Casey of Casey Research at the New Orleans Investment Conference last Thursday.

Bill's commentary was posted on the GATA website yesterday.

View full GSD edition

Grant Williams: This Little [Swiss] Piggy Bent the Market

In April 1999, the revision of the Federal Constitution was approved (how else than through a referendum?), and it came into effect on January 1, 2000.

Oh... sorry... I almost forgot to mention that in September 1999 — after the revision had been adopted but before it had been officially enacted — the Swiss National Bank became one of the signatories to the Washington Agreement on Gold Sales, meaning that all that lovely Swiss gold which had been sitting there, steadily accumulating and making the Swiss franc one of the last remaining “hard” currencies on the planet, was eligible to be sold.

A single line in the Swiss National Bank’s own history of monetary policy identifies the beginning of the demise of one of the world’s great currencies: On 2 May, the SNB begins selling gold holdings no longer required for monetary policy purposes.

And there you have it. “No longer required for monetary policy purposes.

That’s what happens when you finally embrace the beauty of fiat. Not only do you get to sell gold, you get to call the proceeds of those sales “profits.”  The absurdity borders on breathtaking.

I spent a good deal of time talking to Grant at the Casey Conference in San Antonio last month---and we got along fabulously well.  This long treatise on the Swiss Gold Referendum falls into the absolute must read category, because it spells out in no uncertain terms what's at stake.

View full GSD edition

Swiss gold initiative advocates professionalize their campaign and need your help

The campaign in support of the gold referendum initiative in Switzerland on November 30 has been professionalized, erecting a comprehensive Internet site which, while in German, can be automatically translated into English if visited via a Google Chrome Internet browser.

Donations in support of the campaign are being collected at the Gold Switzerland Internet site, operated by Matterhorn Asset Management, whose managing partner, Egon von Greyerz, is a primary proponent of the initiative.

The referendum proposal would bar the Swiss National Bank from selling the country's gold reserves; require the bank to repatriate Swiss gold reserves from foreign vaults and vault all the national gold reserves in Switzerland itself; and hold at least 20 percent of Switzerland's foreign exchange reserves in gold.

Essentially the referendum proposal is a democratic revolt against unaccountable central banking and currency market rigging.

This commentary appeared on the GATA website yesterday as well---and if you're considering donating, this is a must read.

View full GSD edition

Swiss gold exports to India cross Rs 70,000 crore; banks turn wary after black money probe

As banks in Switzerland come under greater black money scrutiny, the quantum of gold having left Swiss shores for India so far this year has reached a record high level of over 11 billion Swiss francs (about Rs 70,000 crore).

The gold exports from Switzerland to India stood at over 2.2 billion Swiss francs (about Rs 15,000 crore) in September alone, which is double the figure for the previous month, shows latest data released by Swiss Customs Administration.

While industry watchers attribute the surge during September partly to increased demand for the yellow metal ahead of Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for 'layering' purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.

According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.

This gold-related news item showed up on The Economic Times of India website at 2:30 p.m. IST on their Sunday afternoon---and it's courtesy of reader U.M.  Reader U.M. sent another story about this that appeared on Internet site just after midnight IST on their Monday morning.  It's got a great chart embedded---and it's headlined "Swiss gold exports to India soar; banks wary".

View full GSD edition

Black-gold rush? Not really

The doubling of India’s gold imports from Switzerland in September over the previous month has led to speculation that this was black money finding its way back into India. But a close look at the numbers suggests otherwise.  

India imported gold worth 2.2 billion Swiss francs in September, up from 1.1 billion Swiss francs in August, according to data released by the Swiss Customs Administration.

But India is not the only country to witness such a surge in imports of the yellow metal. Total gold exports from Switzerland have doubled from 3 billion Swiss francs in August to 6.4 billion Swiss francs in September.

Other Asian countries such as China, Hong Kong, Thailand and Singapore have also upped their share substantially.  For instance, in August, Hong Kong imported about 100 million Swiss francs worth of gold, which shot up to around 900 million Swiss francs in September. Thailand and China, too, witnessed a similar surge.

This article put in an appearance on Internet site yesterday sometime---and it's definitely worth reading.  It's another offering from reader U.M., for which I thank her.

View full GSD edition

As gold smuggling rises, India's tax office calls for lower import duty

Seizures of smuggled gold by the directorate of revenue intelligence has risen by an unprecedented 330 per cent during the April-September period as compared to last year, prompting the directorate to call on the finance ministry to bring down the import duty on the yellow metal and make smuggling less lucrative.

This development comes even as gold imports have jumped by around 450 per cent year-on-year in September touching $3.75 billion, which calls into question the effectiveness of the high import duty of 10 per cent.

Experts say that import duty has failed to as a deterrent and demand for gold has only gone up.

"There were 2,150 seizures of gold made by the DRI across the country worth over Rs 600 crore in the last six months. This is huge when compared to 500 seizures worth Rs 150 crore made last year during the same period," a government official told The Indian Express on the condition of anonymity.

This gold-related story showed up on the Internet site at 1:16 a.m. IST on their Monday morning---and I found it embedded in a GATA release.

View full GSD edition

Australian scholar says futures markets suppress commodity prices, keep producing nations poor

Thirteen years ago the British economist Peter Warburton wrote that Western central banks were using the futures and derivatives markets and intermediary investment banks to control commodity prices giving rise to the adage: "The futures markets aren't manipulated. The futures markets are the manipulation."

Yesterday MineWeb's Lawrence Williams interviewed a mathematician and former stockbroker who holds a doctorate in math from the University of Melbourne, Australia, Fraser Murrell and who emphatically concurs, describing the futures markets as the mechanism by which the financially sophisticated West loots the developing world, which is dependent for its livelihood on the production of natural resources. The Western countries sustaining these futures markets, Murrell argues, thereby perpetuate poverty in the developing countries.

Of course this has been GATA's complaint for many years, but nobody at GATA has a Ph.D., just tinfoil hats.

As Chris Powell just said, GATA has been at this since 1999---but the real voice in the wilderness is silver analyst Ted Butler, as his 30th anniversary of pounding at the gates on this issue is fast approaching.  Murrell's work is basically a rehash of what Butler and GATA and Peter Warburton have been talking about all these years, but without attribution, of course.  It falls into the must read category and it, plus a few other links are embedded in this GATA release.  The first reader through the door with this article was Manitoba reader U.M.---and it's her final offering in today's column, for which I thank her.

View full GSD edition

Giant gold nugget found in California finds secret buyer

One of the largest gold nuggets in modern times pulled from Northern California's Gold Country has sold to a secret buyer.

The new owner of the so-called Butte Nugget and its exact price will both remain mysteries at the buyer's request, the San Francisco Chronicle reported Saturday.

But Don Kagin, the Tiburon-based coin dealer who brokered the deal, said that a "prominent Bay Area collector" paid about $400,000 for the nugget weighing 6.07 pounds. That wasn't far off from the asking price, he said.

"Let's just say it's a win-win for everybody, Kagin said, adding that the nugget went up for sale Thursday with the deal finalized on Friday.

This is, of course, a follow-up story now that the nugget has a happy seller---and probably an equally happy buyer.  This AP item was picked up by the Internet site on Sunday sometime---and I thank reader M.A. for today's last story.

View full GSD edition